Performance metrics is a measurable value that shows how your company is achieving the set objectives at all levels. The metrics are used across the board to determine employees’ progress in attaining targets. Various performance metrics are also used to determine the business’s overall performance, while lower metrics only focus on departments and individuals.
But What Is A Performance Metric?
Performance metrics are related to specific outcomes in the company against elements of measurements. Essentially, performance metrics are defined by establishing.
- Why the results matter
- How you can influence results
- How progress is measured
- How often you will conduct the review process
- How to determine if you have achieved the desired outcome
- What the desired outcome is
- Who is responsible for the expected results?
Read examples here to understand more of performance metrics.
For instance, if your objective is to increase sales this year, you need to develop a sales growth performance metric. Your performance metric may be to:
- Measure progress by deducting expenses from revenue
- Make the business profitable.
- Increase sales by at least 25%
- Hire additional staff and promote existing customers
- Review performance every two weeks
- Assign the Chief Sales Officer with the metric responsibility.
Read Examples Of How To Design Performance Metrics.
Whenever you design a performance metric for your business, you need to ensure that it relates to a specific objective or result. In other words, you need to customize the performance metric with the current situation of your business to easily and efficiently achieve your desired outcomes.
The following steps will guide you into developing an effective performance metric.
Make A Clear Objective.
Performance metrics need to be connected to a major business objective which is integral to business success. Therefore, you need to be strategic in establishing your objectives to avoid measuring an aspect that does not contribute to your business success.
Consult With Stakeholders
Ensure that you effectively communicate your performance metric with all the involved parties in your business. Specifically, managers and employees should understand what your objectives entail and the measurements to be used.
Communication should help employees understand why the performance metric is better than others and why you measure their progress.
Conduct Regular Reviews
It is important to regularly check your performance metrics to enhance development and make necessary improvements. Tracking your performance metric’s progress will inform on whether it is applicable and predict the possible success rate for every department and individual.
Ensure the Performance Metric Is Actionable
It is a five-step process involving.
- Reviewing your objectives
- Analyzing the current performance
- Setting targets
- Reviewing targets and
- Making necessary adjustments in the process.
Note The Changing Circumstances.
Failure to quickly update performance metric could make them obsolete hence the need to consider circumstances and business environment. Having quarterly reviews allows you to make these adjustments if there is a business crisis or a new product line.
Every business should have an effective performance metric to be sure of its direction. These metrics should be used on attainable and ambitious goals that reflect the desired success of your business. Most importantly, ensure you involve every stakeholder when implementing the metric for alignment.